The EURJPY is the subject of today’s technical outlook watch that aims to use multiple time-frame analysis to derive possible trade scenarios for this pair.
The analysis commences from the monthly chart, where we see price in a small retracement channel, angling upwards within a period of downtrending price action that is captured by a bigger descending channel. It can therefore be said that the long-term sentiment is bearish. But can the lower time frame charts lend some credence to this view?
The weekly chart showcases the medium-term outlook of the EURJPY and portrays the smaller channel within the larger descending channel in a clearer fashion. A break of smaller ascending channel to the downside is required to send price towards the larger channel’s return line (lower border), where it may interact with 115.478. This price level happens to be the medium-term support where a previous low occurred on April 3, 2017. This is also the site of historical highs in November 2010 and October 2016.
The daily chart reveals a short term support at 119.64, which is where we have daily lows of 15 and 21 Nov 2019 as well as previous highs of 5/12 Aug and 17 September 2019 interacting. The 1-hour chart also shows price contained in a small rising wedge.
Given the technical levels and the long-term bias for EURJPY, a break of the short term support at 119.64 needs to happen for price to target the medium term support at 118.45. Further support targets lie at 117.02 and 115.47. The 115.47 price area could be a realistic short term target as this price level interacts with the descending channel’s lower border.
On the flip side, a 3% penetration close above the 112.59 horizontal resistance will ensure that the upside break of the descending channel is confirmed. This then opens the door to further upside targets at 124.79 and 127.25. Such a move would invalidate the bearish bias on the EURJPY.